In N.M., Wildlife Group Mislabels Pearce

Posted on
August 11, 2010

This ad says Republican Steve Pearce was "named one of the most corrupt members of Congress." We find that’s a bum rap.

The ad also falsely attacks the former GOP congressman for voting in 2005 to give "big oil giants like BP … billions in tax breaks." Pearce’s vote actually resulted in a net increase in taxes for oil and gas companies.

The ad is by the Defenders of Wildlife Action Fund. It first aired Aug. 5, and it’s the first ad of the New Mexico 2nd congressional district race. Pearce is running for his old seat after losing a Senate bid in 2008. He’s the GOP nominee.

The "corrupt" accusation, while technically accurate, is nevertheless misleading. Based on two unsubstantiated allegations, a left-learning watchdog group branded Pearce "corrupt." Pearce was officially cleared of one of those allegations by the House ethics committee. Furthermore, the watchdog group acknowledged it made a mistake in failing to report the committee’s decision when it repeated its "corrupt" rating most recently in a 2008 report.

One of the ‘Most Corrupt’ Members?

The Defenders of Wildlife Action Fund — which says it spent $500,000 to help Tom Udall defeat Steve Pearce in the 2008 Senate race — repeatedly faults Pearce in its new ad for being “named one of the most corrupt members of Congress.” It is true that Pearce was listed as one of the “most corrupt Members of Congress” in 2007 and 2008 by Citizens for Responsibility and Ethics in Washington, a watchdog group that Roll Call reports receives much of its funding from "liberal groups and big donors to Democratic candidates and causes." But by its own admission, CREW’s report was flawed.

CREW added Pearce to its annual list of "most corrupt" members in September 2007. The group alleged that Pearce "appears to have violated the Ethics in Government Act" for failing to disclose the 2003 sale of the assets of his company, Lea Fishing Tools, to Key Energy on the financial disclosure reports required to be filed annually by members of Congress.

After CREW’s 2007 report was published, Pearce sent a letter to the House Committee on Standards of Official Conduct (known as the ethics committee) to determine whether he should have disclosed the transaction. On Oct. 11, 2007, the committee told Pearce in a letter that he did not violate the ethics rules. The panel concluded that Pearce sold the assets of his company — not the company itself. The company was renamed and continued to operate, so the sale of its assets did not have to be disclosed, the panel found.

In its 2008 report, CREW repeated the claim that Pearce "appears to have violated" the ethics rules for failing to disclose the sale. But after releasing that report, CREW issued a press release on Sept. 12, 2008, admitting it "erred in failing to uncover" the ethics committee’s letter. Nevertheless, it did not remove Pearce — who at the time was running for the Senate — from its list of "most corrupt" members.

In its press release, CREW said it stood by "our original interpretation of the Ethics in Government Act" that Pearce should have disclosed the sale. It did not retract its finding that Pearce "appears to have violated" the ethics rules, even though the ethics panel found that he did not.

CREW’s report also alleged that Pearce may have been guilty of numerous violations — "honest services fraud," or accepting a "bribe" or an "illegal gratuity" — because he supported the position taken by a company whose employees made donations to his campaign. But CREW provided no evidence of a quid pro quo. No charges were ever filed against Pearce.

Key Energy Sale

Moreover, the ad claims that Pearce “got rich selling his own company for twice the value to an oil company that was lobbying his committee,” citing an April 29, 2008, Roll Call article (subscription required). While Pearce did sell the assets of Lea Fishing Tools to Key Energy for more than twice the value that he had reported on his personal financial disclosure forms, the newspaper reported that it “found no evidence that Pearce has taken any legislative action to specifically benefit Key Energy Services.”

Pearce spokesman Brian Phillips told Roll Call that it is “standard accounting practice to value a company based on the depreciation of its assets,” but that the sale price is “based on future potential earnings.” According to the article, Key said it anticipated the company would generate $8 million a year in revenues.

Donations from Oil Companies

The ad also accuses Pearce of taking “over $1 million from big oil giants like BP.” We found this claim to be mostly accurate. Since 1989, Pearce has received $998,178 in donations from persons employed by oil and gas companies and from their political action committees. Oil and gas is listed as the top industry to donate to Pearce’s campaign, according to the Center for Responsive Politics. He accepted $5,000 from BP’s PAC in his unsuccessful campaign for Senate in 2008, as well as a combined $5,000 in 2002, 2004, and 2006.

We have written about this claim severaltimes. Pearce did vote for the bill. While the bill did provide $14.5 billion in subsidies to energy companies, most of that went to electric utilities, nuclear power, energy-efficient cars and buildings, and renewable fuels research — not to oil and gas companies. In fact, tax increases imposed by the bill on the oil and gas industry exceeded the tax breaks, according to a Congressional Research Service report released in 2007.

Congressional Research Service, 2007: The Energy Policy Act of 2005 (EPACT05, P.L. 109-58) included several oil and gas tax incentives, providing about $2.6 billion of tax cuts for the oil and gas industry. In addition, EPACT05 provided for $2.9 billion of tax increases on the oil and gas industry, for a net tax increase on the industry of nearly $300 million over 11 years.

So while it’s true that Pearce accepted roughly $1 million in donations from oil and gas companies over 19 years, his vote on the 2005 energy bill on balance did not give oil companies "billions in tax breaks."

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